United States v. National Bank of Commerce

PETITIONER: United States
RESPONDENT: National Bank of Commerce
LOCATION: New Mexico State Police Headquarters

DOCKET NO.: 84-498
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 472 US 713 (1985)
ARGUED: Apr 15, 1985
DECIDED: Jun 26, 1985

Albert G. Lauber, Jr. - on behalf of the petitioner
Albert G. Lauber, Jr. - on behalf of Petitioner
Terry F. Wynne - on behalf of Respondent

Facts of the case


Media for United States v. National Bank of Commerce

Audio Transcription for Oral Argument - April 15, 1985 in United States v. National Bank of Commerce

Warren E. Burger:

We will hear arguments next in United States against National Bank of Commerce.

Mr. Lauber, you may proceed whenever you're ready.

Albert G. Lauber, Jr.:

Mr. Chief Justice, and may it please the Court:

The question here involves the power of the Internal Revenue Service to levy on a joint bank account where only one of the co-depositors is indebted to the IRS for unpaid taxes.

The delinquent taxpayer here is one Roy Reeves, who owes the IRS about $800.

Roy has a checking account and a savings account at the Respondent bank, titled jointly in his name and the name of Ruby and Neva Reeves, who we understand to be Roy's mother and wife.

These bank accounts are typical of joint bank accounts in most jurisdictions.

That is, each depositor is entitled to withdraw any amount up to the full outstanding balance from the account, without notice to his co-depositors.

The bank likewise is required to honor any withdrawal request that Roy might make, again up to the full outstanding balance, absent written instructions from the other depositors not to pay.

Arkansas law also provides that the bank's payment to any one depositor immunizes it from claims by the other depositors to the money thus paid out.

In short, as the Court of Appeals correctly stated, at the time the bank received the notice of levy Roy could have withdrawn any amount he wished from these joint accounts and used it to pay his federal tax bill, and his co-depositors would have had no lawful claim against the bank.

John Paul Stevens:

No, but they'd have a complaint against him, wouldn't they?

Albert G. Lauber, Jr.:

Well, they might have a complaint against him, and as I will explain shortly, they would have a very similar claim against the IRS.

But that in our view does not negate the fact that Roy had a right to property that the IRS could levy on.

Our position is simply that whatever Roy could do with respect to the account unilaterally, the IRS can do by virtue of its levy power.

And that we think follows from the well-established proposition that--

John Paul Stevens:

Supposing his wife had a big pile of cash at home.

I suppose he could take it and pay his taxes with it.

Could the IRS grab that cash?

Albert G. Lauber, Jr.:

--If his wife had a big pile of cash?

John Paul Stevens:

In their desk drawer at home.

Albert G. Lauber, Jr.:

Well, if the understanding between them was that he had free access to that money, yes, we say the IRS could levy upon it.

But she could then come into court in a wrongful levy action and contend that he misappropriated her funds, but that would be a question as to ultimate ownership.

Here the right to property we're levying upon is the right to withdraw the money.

Warren E. Burger:

If she publicly acknowledged that he had the right, the same right that she had of access, would that affect your response?

Albert G. Lauber, Jr.:

Well, we think that here the equivalent of that public acknowledgment is in effect, because under state law and the banking contracts involved Roy had the right to withdraw all that money without notifying his co-depositors.

Warren E. Burger:

So that's the equivalent of the other public acknowledgment?

Albert G. Lauber, Jr.:

I think you could put it that way, yes.

Since Roy had the right to get the money, we have the right to levy upon the money.

Lewis F. Powell, Jr.:

But under state law who owned that money?